Monday, April 16, 2012

Powered by Lithium: Forbes: A Real U.S. Oil Security Strategy Would Boost Electrification Of Transport Sector

Finally the voices of honest people talking about solutions for the coming Oil Crunch are getting into mass media - will they be heard? Yes, you can not hide the Ugly Truth about Peak Oil any more - There is No Cheap Oil left out there. Policing the world oil supply lines becomes unaffordable luxury now. Americans start to vote with their money for the alternative way with every new Electric Car and Hybrid on the street.

"High Gas prices are the best advertisement for Hybrid and Electric Cars and they are here to stay if economy will not dive again. Americans are not very big fans of Electric Cars yet, but when asked about Energy Independence, 80% confirmed that the Dependence on Oil is unsustainable and they are ready to do something about it. New technology - Lithium batteries for Plug In and Electric Cars is making this transition possible."

"Watch this brilliant documentary on history of Oil. After all these years we are back on the same spiral, but this time the Oil drives the current economic cycle, not the FED any more. We are running out, and we still DON'T Have a Plan."

By Bob Lutz; Frederick W. Smith, the chairman, president, and CEO of FedEx; and former U.S. Marines commandants General P.X. Kelley and General James Conway

Having had the honor of serving as United States Marines, we take seriously the threats that our young service men and women face while defending our country and our liberty. When these threats exist because the United States is the protector of the world’s global oil supply lines, it is a clear illustration of how our nation’s over-reliance on a single, globally-priced fuel impacts our national and economic security.

To liberate the United States from the immense costs of this role and the destructive effects of oil price volatility, the nation requires an oil security policy that, over the long term, decouples our transportation sector from the global oil market. The costs — in both blood and treasure to the United States — are too high not to act.

Economically, Americans are suffering as a result of high and volatile oil prices. Income tax cuts under President Bush — totaling $1,900 for the average American family between 2001 and 2008 — were more than offset by a $2,000 increase in spending on gasoline during the period. The same occurred in 2011, as the $108 billion payroll tax cut under President Obama was essentially wiped out because spending on gasoline increased by more than $104 billion. Americans received tax cuts to stimulate the economy, but the money was put into one pocket and then taken from another to pay for higher gas prices. Any wonder why our economic recovery has been so sluggish?

From a national security perspective, the U.S. military is forced to protect the world’s vital oil infrastructure. The single greatest chokepoint is the Strait of Hormuz, through which 17 million barrels of oil per day passed in 2011 — 20 percent of global supplies. Protection of the sea lanes of commerce has become an American burden and will remain so, costing the United States Treasury an estimated $80 billion per year while taxing our military, which is already engaged on multiple fronts.

To be clear, we would prefer it if the private market were able to solve this intolerable situation. However, some government action is needed to mitigate the risks of oil dependence, because there is no free market for oil. More than 90 percent of global oil reserves are held by national oil companies that are either partially or fully controlled by governments. The bulk of these reserves are controlled by countries that comprise what is nothing more than a manipulative cartel — OPEC. And the vast majority of OPEC countries, along with their oil infrastructure, are located in unstable regions of the world.

The United States should aggressively expand domestic oil production to strengthen the economy and improve our balance of trade. We transferred $326 billion to other countries to import oil in 2011. But even as our country produces more oil domestically and imports less from foreign sources, gasoline prices are rising to near-historic levels. Circumstances outside of the control of the United States, such as geopolitical tensions in the Middle East and rising demand from China and India, put upward pressure on oil prices throughout the world.

The benefits of domestic production are substantial, yet additional initiatives will be needed to protect the nation from increasingly common oil price spikes. Rising domestic production will not shield Americans from oil price volatility. The only way to fundamentally solve this problem is to break oil’s stranglehold on the transportation sector, which accounts for 70 percent of the total oil consumed by the United States and relies on oil for 94 percent of its fuel.

Of all the forms of alternative energy under development for the transportation sector in the U.S., using natural gas for heavy-duty trucks and the electrification of light-duty vehicles hold the most promise.

Regarding electrification, the beauty of plug-in hybrids and pure electric vehicles like the Chevy Volt and the Nissan Leaf is that they are powered by electricity, which can be generated from many sources: nuclear, coal, natural gas, and renewables. Best yet, these are all domestic energy sources, meaning OPEC won’t be able to corner the market. And the retail price of electricity is far less volatile that the price of oil.

Unfortunately, the recent battles over environmental policy have defined electric vehicles as a climate change project driven by hostility to conventional energy production. In fact, displacing oil through alternatives offers the most significant and pressing means to protect America’s private-sector growth engine and global leadership. The environmental advantages of transitioning the transportation sector away from oil should not prevent skeptics of the environmental movement from embracing such a goal. The enormous costs of oil dependence, combined with the absence of a viable free-market remedy, support a policy that leverages diverse, affordable, stable, and domestic energy. Electrification of transportation at scale would accomplish exactly this objective.

Events outside the control of the United States are making oil prices increasingly volatile, damaging household budgets and eroding consumer and business confidence. It’s time to act to protect our national interests and get serious about a real oil security strategy.

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SRSrocco reports on further deterioration of the COMEX Gold inventories available for deliveries. You can guess who is taking now a...

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